Loan Guarantees as a Tool for Economic Transformation
After Apartheid officially ended in South Africa, economic justice, especially along racial lines, remained a major issue. Even to this day, 72% of adults in Southern Africa are excluded from financial services. Shared Interest identified the use of loan guarantees as a way of facilitating the provision of loans to previously excluded segments of the population. Since 1994, they have issued over $24 million in guarantees, leading to $113 million in loans issued.
Donna Katzin and Casey Cline joined us to speak about the use and the structuring of loan guarantees and shed some light on the specific context of Southern Africa, highlighting how guarantees can be a powerful tool in other regions as well.
Women Investing Series from Natural Investments
Donna Katzin discusses, among other things, the impact of Shared Interest work with women in South Africa. She says that, "A compelling aspect of the investment approach that you take is this potential not only to
incorporate women and girls into systems that have historically excluded them but to change those systems and to change them by values and practices women prioritize in order to build more just and inclusive society."
Donna gives examples of women and communities positively impacted by this approach. "It's important to try and bring those women who are not on the screen right now to the table. Just to give you some examples, we talked about influencing the banks, some of which are now beginning to see women as viable borrowers, viable clients, and become interested in their businesses. So that's a change on the institutional side in reducing the barriers, not in eliminating but reducing some of those barriers for women, businesses, and farmers. The impact in the communities is quite sizable. So for example, one of our guarantees was to a group of women farmers who were becoming commercial farmers for the first time. As you know, in much of Southern Africa women grow most of the food, however, the moment that what they are growing in connected to a contract or connected to credit it becomes a "man's business." And because it is business therefore men are expected to do it. Women by and large do not get those kinds of commercial contracts or credit, and so, this particular guarantee made it possible for women to borrow what they needed to expand their fields, to grow more, and by growing more good products at volume they were able to be given commercial contracts and to grow and to hire hundreds more people literally, and that had quite an effect on how they saw themselves. So the transformation happens at different levels."
US IF Talks with Donna Katzin
US SIF and GIIN Host Donna Katzin in Webinar
View the recent Impact Investing in Africa webinar, hosted by US SIF and the GIIN, as Donna Katzin discusses impact investing and the important role of loan guarantees in Southern Africa.